Summary

The lure of treasure. A desire for tangibility and familiarity, coupled with concerns about broader markets, is encouraging more investors to increase the proportion of their wealth that is allocated to treasure. Currently, wealthy individuals hold an average of 9.6% of their total net worth in treasure assets although, in some countries, this share is as high as 18%.

The emotional motivations for wealthy individuals to own treasure are complex, but can essentially be grouped into three main categories: enjoyment; social; and heritage.

Classic cars come at a high cost. Precious jewellery, fine art and antiques are the most popular categories in terms of the number of people who own them. But the most costly pursuit is the ownership of classic cars. Collectors of classic automobiles who have already started a collection — although relatively few and far between in the survey — have invested an average of USD$641,000 in their hobby.

Treasure is “sticky.” Many wealthy individuals express a desire to declutter and offload treasure that they have acquired, but the reality is that few go through with these intentions. High required returns to sell keep many hanging on, with owners of fine art, for example, on average needing a 62% price increase in the year after first owning them before they are willing to consider a sale. This is an example of the endowment effect, whereby individuals will require a price that is much higher when selling an item than they would be willing to pay when purchasing it.

Few acquire treasure for solely financial reasons. Relatively few wealthy individuals own treasure solely for its financial characteristics. Just 18% of the treasures that survey respondents own are held purely as an investment and only 21% are believed by their owners to provide financial security if conventional investments fail. Investors that do seek financial returns or insurance from their treasure typically favour commodity-like items, such as precious metals, coins and jewellery. They derive relatively low enjoyment from what they own and are more likely to sell their treasure than those who are influenced by other motives.

The emotional return. The emotional motivations for wealthy individuals to own treasure are complex, but can essentially be grouped into three main categories: enjoyment; social; and heritage. The motivations are not mutually exclusive and an investor may own a single item for one, two or all three categories of motivation. No investment, let alone treasure, is held entirely for financial reasons or emotional ones.

The most important motivation for owning treasure is enjoyment. With the exception of specific categories, such as precious metals, wealthy investors acquire treasure first and foremost because they derive pleasure from it. Almost two-thirds of the treasure owned by respondents is held primarily because of the pleasure that it brings them. This supports a view that treasure should be regarded as part of an individual’s personal holdings (assets which are owned to support lifestyle or enjoyment purposes), rather than as a separate asset class in the investment portfolio.

Owning treasure can also be a social activity. Roughly one-quarter of the treasure owned by respondents is held for social purposes, such as sharing with friends or showing it to people. Classic cars and fine art sculptures are the categories of treasure that respondents hold where ownership is most likely to be linked with pleasure from sharing them with other people and status from showing them off to peers.

Finally, some wealthy individuals may acquire treasure for its heritage value. These individuals enjoy what they own, and want their descendants to enjoy it too. They are often reluctant to sell their treasure at any price and believe that they have a duty to share what they own for the good of society.

The social utility debate. Wealthy individuals who acquire treasure can perform a valuable role in society by loaning it to museums and protecting it. But there is a view that those who seek to hold treasure and remove their capital from productive investment do a disservice to the economy. By investing directly in businesses and other core parts of the economy, it can be argued that wealthy individuals contribute more to society than collectors with large exposures to art and other treasure assets. These two contrasting perspectives make this a passionate and relevant debate.